Revaluation is a legal and fiscal instrument that aims to determine the fiscal value of real estate in accordance with real estate market indicators. The property tax is created as an "ad valorem" tax, which means that it is a tax based on the value of the property. The premise is that if someone owns a property of 1,000,000 euros, they pay twice as much tax as someone who owns a property of 500,000 euros. The revaluation ensures that all property owners pay their fair share of taxes based on the real market value of their property. For the effect of performing the revaluation, parameters such as sale and purchase price, construction cost, income are taken into analysis. that realizes the property as well as its depreciation or current expenses related to its maintenance. Assets subject to revaluation are mainly dwellings, commercial units, industrial assets, land or service buildings, storage and all other real estate.
The purpose of a revaluation is to bring all properties as close as possible to their true market value. Asset values vary at different rates depending on many factors such as the type of asset, location or urban development of the area. The revaluation also ensures fairness and equality in tax collection for citizens. The purpose of a revaluation is to eliminate any valuation inequalities that may have developed since the implementation of the previous revaluation. This balances the tax burden between taxpayers.
Since the time of the last revaluation program, asset values have changed. Many properties have improved, some have deteriorated. Over time, different neighborhoods develop at different rates. A revaluation of all properties corrects inequalities and inaccuracies so that each taxpayer pays the proper tax on his property.
Revaluation enables individuals or legal entities to revalue assets based on market value. A revalued property gives citizens the opportunity to have at their disposal a valuable instrument for the fulfillment of obligations, especially in cases when the property serves as collateral in obtaining a loan, or for other commercial purposes. At the same time, this serves the market of buying and selling apartments because by revaluing their assets, citizens have the opportunity to pay less profit tax from the transfer of real estate, as this tax is always applied to the value resulting from the difference between the purchase price and that of sales
For example, The price of your property is 4,000,000 ALL. Make the revaluation and the market value price, issued by the licensed real estate appraisal expert is 8,000,000 ALL. The tax you will pay for the registration in the Cadastre of this reassessment is 3% of the difference: 8,000,000-4,000,000 x 3% = 1200,000 ALL. Under normal circumstances the revaluation would be: (without the interim law)
8,000,000-4,000,000 × 15% = 600,000 ALL. As you can see, save 600,000 ALL. After this revaluation, your property has the market value of the moment when it is made 12,000,000 ALL. In case this property will be sold again by the Owner, the tax paid is 15% of the difference between the sale price and the appraised price of the property.
There are two possibilities for revaluation of movable property: (i) With a licensed expert at the local offices of the State Cadastre Agency or (ii) a self-selected licensed expert. In case the individual chooses to do the revaluation with a licensed expert, then his / her application for real estate revaluation is accompanied by the act of expert evaluation. The tax paid for registering this revaluation is 3% of the taxable base.
For the purpose of revaluation, the property is subject to a detailed inspection by the expert. The purpose of the inspection is to record information about the structure and data of the property that will affect its value. The information recorded during the inspection will include elements such as the quality of the construction of the walls, the number of rooms, the heating and cooling system, the furniture, etc. The physical condition of the structure is an important factor that affects the security of the property, and is considered an important element in determining its value. The topographic characteristics of the land are also noted, as they can affect the value. The next step is the evaluation process. The assessment is based entirely on the data collected during the property inspection as well as the related legal and fiscal documentation.
DOCUMENTS TO BE SUBMITTED FOR RE-EVALUATION3
1. Copies of ownership documents
• Certificate of ownership (required)
• Card (if available)
• Indicative map (if available)
• Layout (if available)
2. Photocopy of the owner's identity document.
Revaluation during 2020
Law No. 90/2019 “On the revaluation of immovable property” 1 gives the opportunity to individuals and legal entities to revalue their immovable property until September 30, 2020.
The object of this law is the revaluation of immovable properties that are in the process of registration, including legalized properties in accordance with applicable law.
For interested individuals, the revaluation can be done at the market value of the property based on an act of expertise issued by a licensed expert. The market value in this case however can not be less than the minimum fiscal prices. The tax that individuals will have to pay to register this revaluation is 3% of the difference between the revalued value as above and the value of the property of the registered deed or previously revalued value (for which tax was previously paid). The revalued value in this way will later serve as a basis for calculating the capital gain realized in case of transfer of ownership of immovable property, a profit that will be taxable at the time of transfer at 15%.
Legal entities, which have registered in their financial statements real estate with a lower value than the market value, have the right to make, within the period of implementation of this law, the revaluation with the market value of these properties. Legal entities, for this revaluation, pay 5% of the difference between the revaluation value and the registered book value, for real estate. The legal entity keeps an immovable property card, where it records the respective value of the immovable property from the moment of the initial recognition of the asset and the respective tax, paid according to the legislation in force. The difference between the revaluation value and the carrying amount is not amortized for tax purposes.
1Law Law No.90 / 2019 on Reassessment of Immovable Property
2 ADISA Public Services Information Center http://www.adisa.gov.al/kodifikimi-i-sherbëve/